Palm oil prices rise over 3% amid possible production cuts, but will be capped by declining exports

According to forecasts from the Malaysian Meteorological Department, a wave of monsoon will cover the country from February 21 to 25, bringing heavy rains to eastern regions and reducing palm oil production in East Malaysia.

Amid possible production cuts, May palm oil futures on the Bursa exchange rose 3.75% to 4,673 ringgit/t or $1,053/t yesterday, also supported by increased buying ahead of a major industry conference.

On the Chinese exchange in Dalian, the most active soybean oil contract rose by 0.84% yesterday, and palm oil CPO1 rose by 1.68%.

At the same time, the world's largest palm oil producer, Indonesia, continues to sharply reduce palm oil exports. According to the Central Statistical Agency (BPS), in January 2025, the country reduced its exports of crude palm oil (CPO) and products made from it by 24.1% compared to December to 1.27 million tons compared to 2.06 million tons in January 2024. In particular, exports of these products in January decreased: to India - by 43.6% to 59.5 thousand tons, to Pakistan - by 52.9% to 176.1 thousand tons, and to China - by 76.93% to 39.6 thousand tons.

Recall that Indonesia and Malaysia are the world's largest producers of palm oil, providing 85% of global supplies.